Monday, October 13, 2008

Blame the Bankers If You Like, But Brown Is the Real Culprit

'A global problem which required a global solution', says Gordon Brown, trying to make out that he has been the instigator of the so-called global solution. What he doesn't tell you, of course, is that Britain and America are the only two countries which have been hit in such a devastating way. There's a reason for that. With Brown as chancellor Britain let its finances get out of control and encouraged a debt boom, the like of which we had never seen before. Countries which managed their finances more conservatively have had fewer problems. Any rescue packages they are having to impose are largely due to the collapse in world markets because of what has happened in American and Britain, rather than in their own countries.

The Conservatives must not let Brown off the hook. He set up the current regulatory system and must be held responsible for it. It has failed and he is the man to blame. He was told over and over again the tripartite system was not working, yet took no notice whatsoever. It's all very well to blame bankers for taking short term risks - but the regulatory system which Brown was responsible for not only allowed them to do so but positively encouraged such behaviour. The warnings were there, but Brown ignored them.

There is little doubt that today marks a landmark in Britain's economic and political history.The long term political consequences are impossible to determine yet. Labour apologists (and to some extent parts of the media) are trying to spin this as the day Gordon Brown discovered his vision for Britain - see Jackie Ashley's (third) volte face in today's Guardian.

"With Brown as chancellor Britain let its finances get out of control and encouraged a debt boom"

So are you saying that has we had a Conservative administration for the last eleven years rather than New Labour this wouldn't have happened? Surely you are not suggesting that a Tory Chancellor would have told people how much debt they were allowed to get into? Or dictated to banks who they should be lending to and how much? I don't think so.

The fact is that no Conservative has yet said what they would have done differently. That's because they would either have done precisely the same or have gone even further down the de-regulation route and you know that's true.

And still now, the Tories offer no alternative view on how to deal with the crisis. That's not good enough from a party serious about being in government very soon.

PS - £37bn isn't a cost, it's an investment on which we will get a return. Cheers

This JACKASS probably thinks he's got off scott free. In order to fund his failed social experiments with our money, he needed a booming economy and the tax revenues that follow. When the wheels started to wobble, he just gunned the engine.

He created so much fiscal noise in an attempt to hide the flaws. Now things are very binary and plain for all to see. That said, he and his comrades will virtually fight to the death to cling to power. That's why he needs to be smoked out now, before the debate moves on.

Dave should not underestimate the power of campbell and mandleson. They ran rings round the tory party in the past. If they could get labour re-elected after the Iraq war, ANYTHING is possible, unless the the Tories act now to seize the agenda.

John Coles is yet another trying to smear the Conservatives by denying reality -

Osborne put forward the idea that banks needed recapitalising in an interview with Andrew Marr on the Sunday before Darlings disastrous statement. Darling himself could only get shirty when Osborne raised the issue AGAIN in his reply.

Cameron pointed out that 'market to market' rules and the Basel2 rules were making the matter far worse - but the EU have been dragging their feet on that.

So Conservatives have been warning about the government debt fuelled bubble for ages and given the shocking position we are in have pointed out the only solution.

Will Mr Coles and the rest of his like just stop wasting poor endangered pixels on this rubbish.

Meantime if Brown continues to tell lies about the source of all our problemshttp://www.nytimes.com/2008/10/13/business/worldbusiness/13euro.html?_r=1&pagewanted=1&oref=sloginthen the time for bipartisan ship is over

labourparty, I cannot believe that you lot are still going on about the previous Conservative government, still less Margaret Thatcher when you have been in government for 11 years. If you want to continue with this game, you can go back to the 1970s when the IMF refused to loan us any more money under the Labour government!

As for our current predicament, I am disappointed that the Conservative Party appears to be completely silent on this issue when it is the single most important problem facing our country at the moment. I know that the strategy is probably to wait until markets have stabilised before sticking the knife into Brown to appear statesmanlike, but I fear that won't wash with the public when they are not hearing any alternative from the Tories to get us out of this mess. I really wouldn't rule out an early election if things continue how they are.

Brown not only set up the current 'tripartite' system for bank regulation - which has failed so spectacularly - he also introduced a deliberately 'light touch' 'risk based' regulation system in 2005.It was something called a Better Regulation Action Plan.http://62.164.176.164/press_5005.htm

Brown specifically said -"A risk based approach helps move us a million miles away from the old assumption ... that business, unregulated, will invariably act irresponsibly.""We will look to apply on a wider basis the principle of risk based regulation to financial services legislation and the work of the FSA. The FSA, which we set up in 1997 as a world leading example of how to regulate financial services""t has already done valuable work on adopting a risk based approach and I welcome the thinking it is doing about how it can further reduce the burden of financial regulation"

Amazing that lefties can only think to blame conservatives who have been out of power for nearly 12 years. The BBC with Peston seeking to highlight the Thatcher years was blatant lefty propaganda. Its completely ignorant about whats been going on under its nose for years.

Cameron has been utterly complicit in backing the Government, he should have savaged Brown at every turn, Osborne ? lightweight, if Cameron was a serous political player he would have dropped him like a stone, and put Ken Clarke in his place.

It has presided over a massive debt bubble. That is ITS responsibility. Its regulation model has failed. FAILED.

In all probability the govt did not want to do anything. It was spending like a shopaholic and needed the money from our taxes. The govt moans about bonuses - but the govt needed the taxes on those bonuses to prop up its ever widening deficit.

Brown on TV claiming that 10 years ago in a speech he called for wider international cooperation in financial matters but was unable to persuade other nations. If he was so concerned about the risks to international finance why did he not prepare Britain better for the coming crisis?

Brown is at the heart of EVERYTHING financial in the UK. The Titanic analogy again?

He's the captain, the engine room has been going at full speed with oil being pumped into the machinery as hard as possible. The Captain has continued to call for more and more oil to be used to speed the ship.

Meanwhile, the engine room staff have been playing poker for the last couple of weeks - they never see anyone so do their job for as little time as possible - after all they can earn more money playing cards than they can ever running the engines.

But no one seemed to notice that the engine was now running compeltely out of control with bits flying off all over the place. The alarm has been sounded but it's too late - the ship either remains becalmed with no engines or the whole thing blows up and the Titanic sinks.

The captain walks away Scot-free (!). 'It's the engine rooom's fault, there was nothing I could do about it'.

Robert Peston, who has now been fully exposed as Mr Browns mouthpiece could be right about the end of Thatcherism but not in the slighting way he intended. Labour inherited a golden financial situation and Brown typically, when told it was better even than expected, replied coarsely to his PS. After getting in with the promise to keep to Tory plans he then reverted to Labour Tax and Spend and it has taken 9 years for him to blow apart the legacy that began with Howe’s 1980/81 budgets. How these bastards can keep a straight face when they talk of Browns stewardship is beyond comprehension – or maybe the Toynbees and Ashleys and their ilk don’t even understand what has been done in their name? Labours mismanagement has been an utter scandal and all driven by one man; Gordon Brown, the worst Chancellor since Barber and even more craven in his effort to denigrate Britain and all she stands for than Barbers chief, Edward Heath.

I'd actually say the blame lies ultimately with the Thatcher Govt when they encouraged the ready availability of credit & gave the money markets more freedom from regulation. Everything which has followed on from that.

Of course you wouldn't expect Iain to remember such an incovenient fact.

1986 FS Act - Liberates FS = Good Thing, and establishes self regulatory system. Regulation configured to make markets work, in the sense that it was not A Good Thing to transfer a state monopoly to the private sector or to perpetuate the old monopolies. Some problems, poor 'advice' and so forth but getting sorted. Concept of mis-selling - total cobblers. You are either conned or you are not. Buying direct = caveat emptor applies, buying with advice = professional negligence applies.

New Labour get in. FSMA 2000 act. Disaster. FSA prescriptive system = nationalisation lite. All sectors of FS (but not me and those of my type) abandon common sense and rely entirely on FSA rule book to decide appropriateness of products or advice. Brown also hoses cash at everyone in a giant DIY Keynsian splurge. Quasi nationalised (Remember? FSMA 2000) junkie utility banks mainline on their favourite narcotic - cheap cash. In any other time spending capital and expanding money supply would have created huge inflation, but thanks to Thatcher/Regan and Cold War victory and supply side liberalisation and consequent coming on stream of old commie countries, Brown able to import deflation. Lies about his skill.

Endowment review total nonsense - really just a device designed to take more capital out of insurers which is then spent - adding to money supply. Of all the 25 year endowments I have seen mature only about 5% have failed to reach target, yet on some of them redress has been paid. Bonkers.Brown carries on taxing and spending capital and wildy expands money supply, which leads to asset price bubble in housing. BoE unable to deal with this (FSMA 2000) and are tied to a poison chalice mandate and stupid CPI (Brown again).

FSA rule book (nationalisation lite) found to be NBG. Surprise surprise.

Shit happens.

Moral? 1. Never lose control of the money supply. Brown 0 out 10.2. Prescriptive regulation always fails - can't ever write enough rules. (Moses had 10 carved on stone - I can barely lift all the rule books of the FSA). Brown 0 out of 10

Would the Tories have done better? Who knows. But a basic econ graduate would have done far better than the Brown, and without the public deceit. Where the Toroies have failed is in providing articulate, knowledgeable and consist opposition. I find it very hard to forgive them for this.

I can tell you all that outfits like mine had already seen an alternate view of how FS should be delivered to the end user. This development was taking place despite, not because of the FSA, and from even before 1986. The FSA are now just getting it. The delay in the development of the advice market has been caused entirely by stupid regulation, clueless regulator management who almost universally have been about their own career advancement rather than good regulation, and Gordon Bloody Brown.

Anonymous, a good try at spin, but dear oh dear. The banking regulatory system was set up by Gordon Brown, not Margaret Thatcher. It's hilarious how people still blame her for everything, even though it is 18 years since she left office.

I am a little worried that the when the school bus went half-over the cliff, the drunken driver was at the wheel.His performance supervisor,Mr Brown, was not only on the bus, but encouraging him to go a faster and offering him another six-pack.

The Supervisor manages to get passing motorists to stabilise the tottering bus by attaching their cars to the bumpers. Mr Brown rescues the driver too, before the bus topples off the precipice, taking many cars with it..

At the inquest the board finds that the supervisor has been negligent and even reckless.. but they can't discipline him because he's a hero.

The car owners get shares in the bus company as compensation, the driver makes promises that he won't do it again, and the supervisor resumes his post.The taxpayers fork out for a new bus too.

Out of this have grown other professional association like the PFS and IFP.

Fimbra scrapped under PIA as a unified regulator.

Vast majority of small independent FS firms still trading have been trading for a long time - since before 1986, or at least the people in them have. As most business for these people comes from referalls from other clients they must be doing something right. Plus they are responsible for about 3% of complaints and a smaller %age of successful complaints.

Whatever way you cut it it's banks and direct sellers that cause the most problems.

At least some little sanity has dripped onto Darling and the busted banks have to accept government appointed directors, no bonuses for the board.There are quite a lot of very well versed people who could be appointed to these important posts - Jack Dromey, Peter Hain, Jon Mendelson, Keith Vaz. If Darling wanted to avoid obvious partisanship then he could give the Wintertons a seat or two. Or how about Alan Sugar?The problem is that there are no people who have any track record in this field except for those who have already failed, either in bank management or in borad oversight.Only a few months ago HSBC and Barclays were declaring staggering half-year "profits" - bonuses all round, chaps.

FIMBRA was a side-show, as were LAUTRO and SIB. The FSA morphed primarily out of the SFA, a bunch of incompetent and unprincipled wallies set up under the Tories. I used to call the SFA the Keystone Gestapo, since they had unlimited power and zero commonsense.

The FSA was supposedly our attempt at creating a British SEC-analogue. Its terms of reference mean that it is marginally better that SFA, but not much. British financial regulation is a bodge. It is absolutely splendid, so long as nothing goes wrong. When something DOES go wrong, the regulators excuse themselves by claiming that it's unprecedented. They lash out indiscriminately and retributively at those doing honestly what others were doing dishonestly. They set up a forensic working party, and eventually claim that it can't happen again ... until the next time.

Time to dust off another Bankment aphorism, which got me into hot water long ago:Those who can, do. Those who can't, teach. Those who cannot even teach, regulate.

Albert M Bankment - and what about the PIA - Personal Investment Authority or Parkistand International Airlines.

Trouble is the whole concept of regulation is flawed. The attempt to develop risk based regulation attempts to recognise this, but is of course just as bonkers. By risk based they mean no risk. But no risk for whom? Of course it'll mean no risk for regulators and politicians. Not no risk for citzens. And of course we don't want 'no risk' because if we have no risk we get .... no return.

What is required of the FS market is proper 'supervision' by poachers turned gamekeepers who we trust to make judgements. Sure, sometimes these will be wrong (for example doctors kill more people than handguns) but in the great scheme of things it won't matter as we will all benefit from innovation and efficiency.

Anonymous 11.39 is another anonymous who has shot himself in the foot?.Fanny Mae was set up in the '30s by a Democrat President. And I think Freddie mac was set up by a Democratic Congress.

The whole of the US sub-prime lending problem was started in the 90's by a Democratic president, Clinton, who passed acts FORCING banks to lend to sub prime borrowers - all backed by the state endorsed Fanny Mae etc.

All absolutely nothing to do with Regan.

Our whole botched regulatory system was designed by Brown who is the same man who has presided over this unsustainable debt bubble - and has already run up a huge deficit before the billions pumped into the banks.Far from being well place to see out this crisis we are very badly placed.

If the Conservatives simply lay down arms regarding this issue, then they are equally complicit. This is not a battle between Right and Left, it's a battle between Right and Wrong. To do nothing is no longer an option. There are a lot of angry people all over the country today who are not happy at what the Government are doing, and their voice needs to be heard. Let the Conservatives be that voice!

And for those NuLab trolls out there saying it was deregulation in 1986 that caused all these problems, can one of them just tell me why oh why it has taken 22 years for the problem to manifest itself in this manner?

I never used to get weekly begging letters from credit card companies pleading with me to take their money for 12 months at 0% interest, during the last Conservative government. This is a phenomenon of Brown's credit bubble.

You really need Economics 101 Iain and a dose of fair comment. This is tosh. The suggestion that Uk and USA are alone in this is ABSOLUTE CRAP. Sorry but if you start from there you are of course going to get your comment completely wrong.

Last night on prime time BBC news. Peston was paying back his friend GB for all the leaks with a "This marks the end of Thatcherism"narrative, complete with VT of Mrs T and Dennis, waving at the 1979 or 1983 victory.

To my mind this was the most disgraceful use of the BBC to put across the Party line and somehow blame someone who was in last in power 18 years ago for the current mess.Its funny how the BBC never blaims Atlee for the problems of the NHS

The bail out is only going to help things to not be as bad as they would have, so it's like saying invest billions & have a recession or dont invest billions & have a depression.

Brown over the coming months will be seen for the incompotent unelected fool he is, by Christmas when the recession is kicking our bums all over the shop he will hated even more than ever.

If Labour think because they have ploughed loads of OUR hard earnt cash into a bank gamble they will suddenly get back their popularity they should think again!Doing a job of looking after an economy & looking after the British people are two TOTTALY different things!!!

SO!Lets start the recession & get back to kicking Labours bum on EVERYTHING else they have let us all down with :o)

"The great credit boom began in the mid-1980s, when the Conservatives removed all the market restraints that created those frustrating 'mortgage queues'. Until then, would-be buyers had to save for a deposit, were prevented from borrowing more than a fixed multiple of their annual earnings, and couldn't increase their mortgage each time they felt in need of more spending money. The legislation that allowed Northern Rock to convert itself into a bank, so that it could expand by borrowing from other banks, was passed in 1986. Deregulation such as this has been central to the myth of the Thatcher years as the golden years of free enterprise and prosperity. Mr Osborne is 37. You would think he was old enough to remember."

Regardless, it doesn't matter how many times you say Gordon Brown is at fault - the key point is that no one in the Conservative Party at any point over the same period of time would have done anything different and therefore the criticism is moot. Had the Tories been suggesting that excess levels of debt were a problem (like Vince Cable did) had they said that extortionate bonus for short term profits were a recipe for disaster (as Will Hutton did) then maybe they could say I told you so. But they can't, which is why railing against Chancellor Brown is like shaking your fist at clouds....

Look, what everybody has to realise is that the days of 'small government' are over. Simple as that.

The Modern Tory Party is going to have to rethink many of its proposals and its ideas. If David Cameron wants to keep on top then he has got to keep calm, be steady and >> important>> don't be negative!

You just have to look at John McCain's car crash of a campaign to understand that people to not want to hear political bickering at a time like this. McCain's negative, mean-spirited and erratic behaviour have destroyed his reputation and his campaign.

My advice to DC would be to stick to the highground.

Common sense. Don't bash Brown - he's already a goner. Concentrate on the people who are about to lose their jobs.

Iain, you should lead by example instead of putting out this childish stuff...

Iain the de-mutualisation and de-regulation of the banks was set off by Maggie and Major. Brown (or Blair) could have reversed more of this than they did. Also the privatisation of the utilities was allowed to remain. Look where that got us.

I suspect that BLAIR would have over-ruled BROWN on matters of regulation as he was more or less a Tory economically.

Don't think that's quite fair. Cameron was damned if he spoke (he would have been accused of cheap party-politicking and would have added to Brown's stature) and now he is damned if he doesn't.

I have no doubt Cameron and Osborne's time will come and they will be briefed to the tonsils about how and why this is an American/British problem largely of Brown's stubborn making.

When some of the dust has settled and some of Brown's false claims are exposed, he is going to come out of this very badly - and he won't even have his newest millionaire chum in the Commons to help him.

It would be bad tactics to attack a man who is doing his best even though his best would not have been necessary had he been better before.

Iian is right. This mess started with Brown and US. Euro etc got cought up in it by their own stupidity, but it started here and in the US. And its seeds are in Thatcher's time, but not het fault.

We are confusing 'regulation' with 'supervision'. Nobody, least of the free market doyen Adam Smith, advocated total laissez faire. Thatcher was right to free the FS market from protectionist policies as much as she was right to end the closed shop.

However when you create bureaucratic regulators you don't get good regulation you get bureaucracy. The best regulator we had was the BoE because it had eveloved its techniques over centuries and was not a bureaucratic regulator.

The idea that people should be saved from themselves (Chris Paul) is sheer bloody arrogance. If it is made clear to people that caveat emptor applies they will theink twice before doing something. Taking away responsibility as leftyism does leads to more irresponsible behaviour. And for a great example of irresponsible fiscal behaviour look no further tha Gordon Brown.

Gordon Brown bought into the Thatcher revolution of wealth creation but ignored the other side of sound money and low governemnt spending. New labour brought in the Third Way, which boils to the essentials of borrow, tax, spend and ignore the money supply as GDP growth will sort that out. In other words strip out the wealth created by free exchange and allocate the capital sequestered according to political whim and vote buying.

Thatcher always advocated freedom AND responsibility. This governemnt has been irresponsible.

Oh gods, yes, the PIA. I had managed to forget *all* about them. What a shower of ordure they were; the outfit for which the phrase "delusions of adequacy" might have invented.

Returning to the SFA, I was once sent the CV of one of theirs who was trying to get into the industry. Current position: Enforcement division (1 year). Previous employment: Assistant manager, Woolwich Building Society, Catford branch.

On 'our' enforcement team we had one imbecile who had failed as a gilts dealer (something of an achievement in itself), failed as a money broker (couldn't even keep one moving exchange-rate in his head) and had then been staked by his dad with a seat on LIFFE. Guess what, he did the whole lot within a very few months. In the eyes of the regulators, this shining career path equipped him perfectly to tell other people how to do their jobs.

“.. a country that is more dependent on US inward investment than any other (90% of exports are made by foreign firms) cannot afford to embed the impression that the once lauded Celtic Tiger economy, is out of control.”

We have to be fair, I remember the late eighties housing boom followed, of course by bust, repossessions etc etc. I know people who were in negative equity for ten years so let's not get carried away.Whilst they won't be getting my vote I do think Brown and Darling have come over pretty well.My mate is blaming decimalisation for the whole shenanigansfreedom to prosperPS Am I the only one who feels the tide may be turning?

It seems that the current Brown revival has got the wind up you Tories. The public are being fair about how they share the blame for the current crisis and the bankers are getting most of it. Brown on the other hand is getting the credit he deserves for confronting the current crisis creatively and purposefully. Gideon Osborne is mute because he does not have sufficient grasp of the issues to be able to contribute to the debate, hence Ken Clarke's sudden return to the limelight.

If Brown thinks now that Thatcher's policy's were to blame then why didn't he change them 10 ago?Why did he state that he was going to maintain tory fiscal policies when he came in office?So it took him from 1997 till the banks collapse before he saw there was a problem. It really proves that he is not capable of recognising problems. He couldn't even see the problems he himself created over the 10p tax saga.

This is the end of free markets, so in that sense it is the end of Thatcherism, Peston's spot on.

Brown is culpable in the sense that's he's been Chancellor during an era when derivatives instruments have become significantly more complex and leveraging, both personal and corporate, has blown up out of all control.

But to blame him for the credit crunch and global economic crisis? Bit of a parochial view from little Britain over there.

50bn for the economy of a country is less than it cost to prop up AIG..

If the 'wind is up' the Tories, it is quite right it should be - they've sat back and let Brown walk all over the UK public - the taxpayers, the pensions, the small business people, the small shareholders. Maybe with the wind at their backs they might do something.

The thinking public are indeed being fair - they are blaming Brown fairly and squarly for his reckless management of the economy'; and for the constant leaks that are making the situation worse. They are also blaming the foolishness of bankers. However, with Brown's bailouts continued bankers bonuses etc, we are not sure he is!!

What we, the public, are very angry about is that the media seem to think Brown is acting in our interests (we know he is only acting for his own interests); and are blaming Margaret Thatcher for Brown's mistakes - which is so unjust it is not true.

Give a murderer a knife and he will kill for his own advantage, but don't blame the knife manufacturer, they made the instrument to make life more efficient and pleasant.

PoliticoSo far many people who understand finance have said Brown has probably done the right thing - for once. But they also say, it was his fault in the first place, and that his dithering and leaks have made the situation worse.

Brown was described on the BBC today as the brave fireman fighting to put out the flames. Channel 5 last week had on Neighbours a brave fireman who was discovered to have deliberately started the fires. An unfortunate coincidence?

Andy C. "This is the end of free markets, so in that sense it is the end of Thatcherism, Peston's spot on."

A comment that shows just how ignorant people like you are. The free market has been going since time immemorial - ever heard of Adam Smith? And what of the free markets opposite - communimism and planned economies; they've hardly been a rip roaring success have they? Look how China has prospered since it left that behind!

What you call Thatcherism, was monetarism, mooted by the likes of Milton Friedmen. Now we may have to return to Keynesiasm, but believe me that needs the free market even more than ever.

I think what you really mean to say is that the banks need more regulation - and of course who devised the currerent disastrouse regulatory regime; well some came from Brown and some from the EU care of Basil 2. So what has failed - ah socialism!!!!!

I don't think you read my post properly. Anyway, the Conservatives are at fault because their job is to oppose - and they haven't said a word.

That, Canvas, does not need to be negative or mean-spirited, there is enough in Brown's actions to be very objective about their detrimental effects, and still put Cameron and Co look on the side of the UK Public. Unlike Brown whose first thought is for himself.

Sky have just reported that if the £37 bn injection goes up in value by 10% that will be a £3.7 bn profit for the tax payer and that can be used to fund the NHS.

Give me strenth - no it will not be a £3.7 bn profit! No wonder maths standards are declinig in schools. The cost of the interest payments that Govt will have to pay for 5 years on the £37 bn it has borrowed to fund this injection while it waits for its investment to be returned will have to be subtracted from that increase in value. Unless the banks getting the cash also pay interest out to the Govt at least 2% over Libor for the funding AND the shares go up in value the Govt will have lost money on a risk adjusted basis.

I wonder if Sky are just quoting directly from a Govt press release?

I remind everyone that we have no idea what form, what terms and what mechanism is actually going to be used to inject this cash yet. As far as I can see this is just another vacuous plan and statement of intent to do something but without any real idea how it is going to be done.

As far as I know the LLoyds / HBOS deal is still being negotiated nd the Lloyds shareholders could still vote it all down.

This whole package is not a done deal yet and I still predict that RBS/BOS will emerge as a fully nationalised merged entity under Govt control with a £30 bn injection effectively going to maintain Scottish jobs. Lloyds will just buy the Halifax part of HBOS in the end.

“The great credit boom began in the mid-1980s, when the Conservatives removed all the market restraints that created those frustrating ‘mortgage queues’. Until then, would-be buyers had to save for a deposit, were prevented from borrowing more than a fixed multiple of their annual earnings, and couldn’t increase their mortgage each time they felt in need of more spending money. The legislation that allowed Northern Rock to convert itself into a bank, so that it could expand by borrowing from other banks, was passed in 1986. Deregulation such as this has been central to the myth of the Thatcher years as the golden years of free enterprise and prosperity. Mr Osborne is 37. You would think he was old enough to remember.”

Cameron has the sense to keep his trap shut on the issue.It's a plus for Labour the likes of Osborne and Daley haven't got that sense.

I see Jackie Ashley's a psychologist now. Brown's new mood is easy to explain, she says. He's free of petty issues and has something important to do. he can stand tall. What revolting, partisan, submissive garbage.

There was I thinking that he was looking so pleased because he believes this crisis has seen off the leadership question, seen off the Tories (and they're doing their best to encourage that view themselves - where is any holding him to account for his part in all this?) and given the deranged power-hungry bully more power over the economy than he could have dreamt of just a few weeks ago.

Brown may very well be the "real culprit" but the fact is the Bankers and "The City" have messed up "big time" and seriously damaged the chances for the Conservatives winning the Election because you can bet that Campbell & Co will keep banging the message home that it was Thatcher & the Tories who started the problem with de-regulation of financial services in the 80's(and "Joe Public" has to blame someone for their own mistakes) from now until May 2010

The current freezing of the credit markets, the associated decline in bank share prices and the decline in Sterling are all signals by 'the market' that things are amiss and that no-one wants to trade in the market. As one of you pointed out, trust has gone.

This current situation is the markets doing what they do best, giving price signals. As yet the price of debt, banks and sterling are too high. Sooner or later someone will say, 'Bugger it I'm going to do something WITH MY OWN MONEY' and that will start things loosening up again.

The principle problem is entirely down to Brown, that is the destruction of the value of Sterling by the abandonment of any sanity in the money supply. He has taken his monopoly of money manufacture, outsourced a lot of that manufacturing to the retail banks and gone on a spree, for which we will have to pay.

This current meltdown is a judgement on socialism not capitalism. Socialism is a giant wealth destruction machine and here we see it at work. Unsound money is a hallmark of socialists. Why? Because it is not theirs and they therefore take no care in its stewardship.

So the lessons are :

1. Free Markets are succeeding, yet again, to pass judgement on profligate socialist governments2. It is all Browns fault.

If the Fed and Treasury had not stepped in we'd be hoarding petrol and stockpiling guns. And I'm not kidding.

Free Markets are frozen I agree. But that's as a result of the intervention. If they had been allowed to work as designed - i.e. Bear, AIG, Fannie and Freddie, MS, GS and every other financial had been allowed to be battered, we'd be talking about economic armageddon.

So again I ask the question, which element of free markets and deregulation are working?

This is what he said about Labour's reform of financial regulatory practices in 1997.

"I am confident that the simpler system we are proposing will reduce compliance costs, and increase public confidence in the regulatory regime… The UK financial services industry needs a regulator which can deliver the most effective supervision in the world. You cannot ensure the success of British financial services in the 21st century without modernising arrangements for the protection of investors. My reforms are essential to ensure the future confidence of investors large and small, and the future success of the increasingly integrated financial services industry on which so many British jobs rely… The current system of self-regulation will be replaced by a new and fully statutory system, which will put the public interest first, and increase public confidence in the system."

This is what Peter Lilley Shadow Chancellor said in 1997. Hansard 11/11/1997 para.732

"The Bill will hive off debt management to a new quango under the Treasury. We know that funding policy is an intrinsic part of monetary policy, and the Bill will leave the Bank as a one-club golfer without even a putter left in the bag. How will the Treasury, the Bank and the new board co-operate to handle monetary policy? If they need to get together, why is it necessary to separate them in the first place?

With the removal of banking control to the Financial Services Authority--the "super-SIB"--it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.

What happens if the needs of the banking system conflict with those of the inflationary target? That has happened in the past in the United States, and it could conceivably be happening in Japan. I understand that there is a suggestion that a committee is to be established to work between the Bank, the FSA and the Treasury to try to cope with that sort of problem. If that is necessary, why is it necessary to hive off powers in the first place? "

Iain, you are blatantly ignorant of economics, and disingenuous regarding what the tories would have done. I think you should stick to topics you know - this blatantly isn’t one.

I cannot imagine that you believe the tories would have done very much differently. Are you saying that the tory party are against personal individual responsibility? Hindsight is a great thing, however. There was no clear line from the tory party that there should have been more regulations and a cutback on lending.

I've written a rude letter to Cameron telling him to get his finger out or resign. I urge anyone else on this blog to do the same. Bloke's as wet as water. Flash Gordon the Saviour of the Universe is riding high and Dave and Boy George are just standing by and letting him get on with it. Pathetic - beginning to think the Heff is right after all!

wanwa, I totally agree. I work in the financial markets and the consensus is that Brown is actually doing a fine job right now.

I understand there has actually been a lot of party consensus on this - both Osbourne and Vince Cable have been working with the Treasury on this, hence the absence of party political b/s. The last thing we need right now is politics. It is stunning to me how little politicians know about economics or what is generally happening right now.

"What he doesn't tell you, of course, is that Britain and America are the only two countries which have been hit in such a devastating way"

Yeah, the Icelandic, French, Germans and Italians are all laughing their little heads off as they swim around in their pools full of money. They're certainly not gripped by panic and announcing plans to pump billions of Euros (or borrowed Kroner) into their banking systems. And OBVIOUSLY Gordon Brown was to blame for the collapse of the US economy!

Come on, Iain, you can do better than this.

As for the death of Thatcherism, perhaps Peston was talking about the way the Tories are now seemingly in favour of state regulation of business and opposed to individuals taking responsibility for their actions.

***I work in the financial markets and the consensus is that Brown is actually doing a fine job right now.***

Andy C, the financial markets cock everything up and Brown steps in to use taxpayers' money to prevent them having to take responsibility for their crass, greedy and incompetent actions.

And they thing he's doing a wonderful job. What a surprise!

If we're going to use the financial markets as judges of financial competence, don't we have to pretend that they're not the same people who buggered up the market by running up enormous debts against a pile of worthless U mortgages?

The questions Osborne asked in return were excellent. Many of them have been asked on blogs in various places this morning but frankly Darling could not answer them.

The issue of why Govt is taking so many ordinary shares alongside preference shares without any warrants was one he certainly could not answer.

My conclusion is that this bail out has not been imposed on commercial terms and the bankers have had far too easy a ride. The management bonus issue has not been dealt with - cash bonuses will not be paid this year but equity bonuses will. Well that was a tough set of conditions - WOW!

Strikes me that bankers here sensed the Govt was deperate for a deal to happen and took advantage of that. Frankly, if I had been Chancellor I would have threatened to put them into bankruptcy unless they accepted my terms. This very clearly did not happen.

I also heard that Darling admitted to paying 65p per share for RBS shares on radio this morning and I note the share price is now trading at 61p. Great investment in ordinary shares that wil pay no dividend and goes down in value as well.

I say all this as an RBS shareholder who may even benefit indirectly from this Govt largese.

My take on this thing is that it's main street who is responsible for this thing, the massive overleveraging on mortgages and credit cards, when people clearly couldn't afford to pay them. In the US at least, the lack of individual responsibility is staggering.

Then obviously the banks and mortgage brokers have some responsibility in writing the loans and packaging the CDOs. But if the loans had been good and people had honoured their debts in the first place...?

I was in two minds about the bailout. As a debt free responsible individual I am not happy about my tax dollars going to bail out homeowners who've acted irresponsibly. But by the same standard, I really don't want to be stockpiling guns and gas as the world economy fails around us.

I guess it's all about perspective, and from this side of the ocean, Brown is doing a pretty good job. His financial literacy is standing him in good stead - Britain is actually looking quite impressive in this crisis. Makes a nice change to be proud of our little country for once.

Brown is without any shame and will do ANYTHING to save his bacon - HE CAUSED THIS MESS WITHOUT ANY DOUBT - like the bankers having their bonus cut we now need to see brown cut right down to size so he gets no bonus from in incompetence - the man has virtually ruined a Great Britain - he should be got rid of FAST

Andy C:-"If the Fed and Treasury had not stepped in we'd be hoarding petrol and stockpiling guns. And I'm not kidding.

Free Markets are frozen I agree. But that's as a result of the intervention. If they had been allowed to work as designed - i.e. Bear, AIG, Fannie and Freddie, MS, GS and every other financial had been allowed to be battered, we'd be talking about economic armageddon.

So again I ask the question, which element of free markets and deregulation are working?"

Nope, that IS the free market working. The fact that the capital markets aren't working does not mean that free markets aren't working. In fact they are. They are passing judgement on the trustworthyness or ability to pay of some of the other participants.

You have no evidence that if banks had gone bust we would be facing armageddon. It's supposition. It is equally as plausible to say that some banks would have survived and that the BoE and administrators would have taken over the running of the bust banks so that the day to day transactions of banking would have continued.

Eventually the price of bank shares would have fallen to where even I might be pursuaded to buy some.

You lack faith in the power of all of us to get on with stuff even when shit happens. And we do.

The biggest hit in the failure scanario would be taken by Brown, and that's the puropse of all his activity, saving his skin, not ours.

If you don't think that by allowing even just AIG to go down, let alone the others I've mentioned - and we're not just talking those institutions we know about (this would have taken down MS - which was a VERY close run thing I can tell you - and Goldmans without a doubt), there would have been a complete f**ing meltdown, you're crackers.

The Tripartite financial regulatory scheme set up by Brown has a lot to answer for over this.As an article in the New York times concludes it was a lack of regulation that caused this.Now we have a situation of mainly English taxpayers bailing out Scottish banks to the tune of 37 billion,this couldn't be to scupper the SNP or is that too cynical.

Brown is useless. He's caused the misery here by running unsound money. Whatever way you cut it that is the case. Unsound money and taxing and spending capital are doomed.

I agree about credit card profligacy etc. Question is do we get the government we deserve, or does the government set the tone for the behaviour of the electorate. I reckon it is a bit of both. Certainly the financial illiteracy here is staggering and a cult of celebrity among politicains, Blair in particular, encouraged mimicry beyond rational affordability. And the New Labour mantra of the Third WAy promised milk AND honey for the same price as bread and water. We could have gazillions spent on 'public services' and still have a booming economy. That's a downright lie.

And as far as Gordon looking good to you is concerned, that is the sole purpose of his bailout for our banks. The main question on his mind, like the girl in front of the mirror, is 'Do I look good in this?'

This post by Iain is really stupid. This crisis is not Gordon Brown's fault - yes, he might have helped...but this is GLOBAL crisis. It's not as Iain suggests just a UK and American problem. It's a world crisis.

I am not remotely a fan of Gordon Brown - but Iain's post is unhelpful and dumb..

Andy C - there is always a case for a lender of last resort facility by government to stop sytemic failure or even an single institution with a problem, and I am not saying that every bank and insurer should be alloweed to fail. What I am saying is that the bailouts being rushed through are not the only solution and that some companies must fail. AIG could have been one of those. It may have been possible to do a chapter 11, isolated the credit insurance debacle by the use of public money and got the rest going again. I admit that I do not know enough about the AIG problem, as I suspect neither does many of us, but I am entirely suspicious of governments when spending shed loads of my money in my name on things that have not been explained to me and my feelings not considered.

The basic structure of the economy relies on tension between trade, interest rates and the exchange rate. If any one of those things goes out of kilter, through regulation, tarrifs, subsidies or taxes, then problems arise.

Brown has been profligate. The last time the budget balanced was in 2001/02 and every year since there has been a deficit of at least £20bn. Over the lifetime of the Labour Government he has spent £200+ bn more than he got in and more still if you include PFI and pension liabilities. The figures are on the ONS website - go look.

With the bail out and bungs of this year and next and next, National debt will likely double over Labour's time in office.

The consequence has been higher taxes and a loosening of money supply through debt creation. Interest rate policy has been a one-trick pony and regulation - Brown's system from 1998 on - has been looking the wrong way.

Capital adequecy rules mean nothing if, like PFI, the liabilities are "off-balance sheet" in shareholdings in other companies.

The shit has to come out. Valuations of assets must be produced right through, including all the "off-balance sheet" stuff, and justified against a recession filled future, then we will know what Banks and other companies are truly worth and sense will return.

Because of the tensions elsewhere, the only lever left open to the world is free trade. Liberalise agriculture - throwing some of the bail out bung to farmers in return for an end to tariffs and subsidies in two or three years - and then the opportunity for investment in real income producing asset, farms in Africa, Asia etc, will open up. Banks can then stop chasing the last cent of profit out of every loan.

Firstly, my apologies for the direspectful tone of the last post. I am exasperated by the lack of basic knowledge around this credit crisis and this is not a political point scoring exercise, it's much much much more serious than that.

Secondly, I totally agree with your last post. I have always understood conservatism to be about individual freedom but with that right comes individual responsibility - that is not asking the state to bail you out when you act irresponsibly. And it's been going on way too long - this goes back 20 years or so.

Interest rates have been too low for too long, encouraging borrowing, not saving and there's been too much cheap money in the system.

I do agree that deregulation hasn't helped, but that has been intended to free up and harmonise markets and make them more efficient, unfortunately the by-product of that has been a lack of oversight and encouragement of poor decision making at a corporate level.

I tell you why I like Brown right now. He doesn't need this stuff explaining, he is getting on with getting a solution and working across party lines to get it done. We could do with some of that in the states...and there's a few governments in Europe who would quite like a bit of leadership like that at the moment - i.e. the Germans.

I do not want him running the country at large, he's been a poor chancellor (who sold off our gold reserves at rock bottom prices) and an even worse PM. But right now, I don't want a politician solving this mess - here in the US the country's not being run by Bush, and the presidential candidates are playing decidedly second fiddle to Paulson and Bernanke.

Vacuous, ignorant and dithering, Cameron falls back on the dominant ideology of state socialism. He has faced his first major challenge as Tory leader and failed miserably. He has to go, otherwise the Tories will not beat Brown in 2010.

Andy C posted: "I tell you why I like Brown right now. He doesn't need this stuff explaining, he is getting on with getting a solution and working across party lines to get it done. We could do with some of that in the states...and there's a few governments in Europe who would quite like a bit of leadership like that at the moment - i.e. the Germans."

Unfortunately he does need this stuff explaining to him. he's fine on theory (I have been told) but as far as actually running the whelk stall...?

And I do not want across governemnt consencus. I want Almighty great rows between government and opposition so that the arguments can be fully tested. I want an open and fierce debate about this, but I do not want it done in silly party partisan ways. I want men of principle who understand the ramifications of all this to stand up and have a real go at the consensus. Don't forget, the consensus was once that the world was flat.

Tell us Andy C what do you mean by -"do agree that deregulation hasn't helped,"

Brown created the present regulation regime yet perversely you say you are glad he is in charge because he knows what he is doing.

See '215cu'. You may be naive but I am not.

'Summer' --- The Tories have been opposing (again see 215cu - the Tories have been pointing out the errors of labour policy for years) - but given where we are there is no real alternative to bank recapitalisation (The state funded part which seems principally aimed at preserving Scottish banks)

The other point Mr Summer is that the last thing anyone wants is to see party squabbles as Rome burns. The necessary bill will get its passage but I expect the Tories will still continue to point out the weak state we have been left in. And I expect the labour trolls will simply criticise THAT.

The problem of opposition has been that people have felt wealthy precisely BECAUSE of the Labour debt bubble and ignored the Tories. its this very debt bubble the Tories have been complaining about which has left us in this mess.

Of course it is nonsense to say Cable outclassed Osborne (in fact he agreed with one of Osborne's main points about the proposed new level of lending). Cable was in fact irrelevant in his remarks - This Dolly Trolly propaganda is risible.

It beggars belief that even the trolls can rejoice in the man i.e. Gordon Brown, who has overseen the biggest financial disaster this country has ever seen and now want to applaud him for landing us with the greatest debt this country has ever witnessed.

He had no option to produce a bail-out plan. He is not a hero he is the worst Chancellor/Prime Minister in history and this is the guy that you are praising.

Oh and you think it's a good idea to implicate/denigrate Cameron in the process. OK then smart guys just what alternatives did Cameron have other than but to go along with it? None!

"Whose view do about Gordon Brown's performance on the economy do I trust most: Iain Dale, or the winner of the 2008 Nobel Prize for Economics."

That depends. If a bus driver is dozing at the wheel, mounts the pavement and mows down the bus queue, do we praise him beacause he then wakes up and tries vainly to give them first aid?

Brown always claimed it was his boom, not one inherited from Major. Well, then this is his bust. He was Chancellor at the critical time and he oversaw (or didn't) the build up of systemic risk that wrecked the system.

Of course it is not all about Gordon Brown. I never said it was. But according to him, none of it is. I am simply pointing out that he should have the courage to take his share of the blame. But courage was never his strong point, was it?

"we are all to blame. How many people overextended themselves...What about personal responsibility? What about living within our means?"

Your jaundiced sneer at hard working young people struggling to keep their jobs and homes during the early stages of a recession is as immature and ill informed as your habitual reliance on ad hominem attacks, Canvas.

A substantial number of those who are in debt are hard working young couples, young families and young single people - they include one of my children.

Thanks to Brown's reckless overheating of UK's housing market, which has sent house prices and rents rocketing, they've been forced to take on hefty mortgages or rents that they could just about afford because it was the only way they could afford a home of their own.

Now many of those mortgages and rents are no longer affordable, due in no small part to Brown and nulabour's reckless exacerbation of price inflation with an orgy of government debt and stealth taxes.

An increasing number of people are getting in debt due to redundancy too.

Wake up and take a look at the real world outside your the elitist market town home.

Few people can afford to live among the millionaire's thatches and delicatessen crammed wicker baskets of Saffron Walden as you do, "I'm a wee bit of a [champagne] Socialist", Canvas.

Auntie Flo, you're quite wrong to say that personal responsibility plays no part in this crisis. It is quite true for me to say that many people overextended themselves financially knowing they were living outside of their means. The banks were only too happy to assist. They banks are now paying for their greedy ways. We were all irresponsible.

Gordon Brown has played his part too. So did Margaret Thatchers economic policies. So did so many other things.

However it is simplistic and unhelpful for Iain to say "What he doesn't tell you, of course, is that Britain and America are the only two countries which have been hit in such a devastating way".

That's complete rubbish.

The boom and bust has several causes besides dodgy lending ,a tide of cheap money from emerging economies, outdated regulation, poor supervision, government distortions. These failures didn’t just happen in the UK and the USA…

Small government is now a thing of the past.

My point is that Iain should be focusing on what we can all do to get through these difficult times and then we should find ways to make sure this never happens again.

You can continue to make personal attacks on me, you can try to play your class warfare card, but that is just a distraction from the real argument. I stand by my view that Iain has turned this crisis into a partisan argument and he is wrong to do that.

That would be a first. Fairly rare for them to think at all. But I am enjoying all these rants from tory loons. I do hope they keep it up - no-one believes them, it brings out the hilarious worse in them, it provides enormous merriment to everyone else.

"Auntie Flo, you're quite wrong to say that personal responsibility plays no part in this crisis."

Canvas, at no point in my posting do I either state or suggest that personal responsiblity plays no part in this crisis.

Where's your copy and paste from my text? You didn't provide that because I've raised valid points that you can't answer. So you resort to nulab style spin and manufacture false claims - claims I did not make - in order to criticise my post for statements I didn't make in it!

No, that's not the case, anon, aka Canvas, that's just more nulab spin from you.

There was a major qualitative as well as quantative change in both the volume and nature of UK surveillance systems after Major. I would add that I am no fan of his any more than I am of Thatcher.

You're becoming noticeably attached to outdated nulab spin, c, are you after a new job with Miliband - or Mandelson? Do hope they take you on as, boy, will you mess up their spin.

I've previously posted a history of UK surveillance to Iain's blog - it needs updating and no time for that now. I believe this, with updates, clearly outlines how nulab have both systematically proliferated surveillance systems and transformed the nature of surveillance, making it something very sinister indeed.

Auntie Flo, I am not the 'anon' 1:18 talking about surveillance. That is the absolute truth. Promise. It's not me - so you have a weird muddled conversation going on with two people... :)

Back to the point of personal responsibility and living within your means...

Your response was "Your jaundiced sneer at hard working young people struggling to keep their jobs and homes during the early stages of a recession is as immature and ill informed"

That was such non-sensical and aggressive responsive that I thought you must have disagreed with my point.

Now that we know you agree with my point about personal responsibility - will you accept that politicians do not want to tell the taxpayers that they too must share the blame for this crisis because they are scared of losing votes?

it appears that you do not disagree with what I say - it's just that obviously dislike me. That's totally cool. I don;t mind at all. Just please try to be reasonable when you respond - there is enough hate in this world.

"Now that we know you agree with my point about personal responsibility"

Where did you get that idea? I most certainly do not agree with your point, Canvas.

Clearly a proportion of the people of UK have acted very irresponsibly in borrowing more than they can afford.

Not least of these is Gordon Brown, the PM who has made himself the top role model for systematic reckless borrowing and for getting yourself (or in his case, the country) up to our necks in debt.

You are, however, totally wrong when you state:

"we are all to blame"

Millions of hard working people, many of them young couples and young singles who are now living in fear of losing their jobs and/or their homes, were in no sense reckless. They were forced to take on large mortgages or hefty rents solely thanks to Brown's, Blair's and nulabour's recklessness and gross negligence in over heating the housing market.

Had not done so they would not have had homes.

"Auntie Flo, I am not the 'anon' 1:18 talking about surveillanceAuntie Flo, I am not the 'anon' 1:18 talking about surveillance"